More on fast-casual: Does Shake Shack stack up to Five Guys?

Interior of a Five Guys store in Charlottesville, Virginia. Note mass quantities of free, fresh-roasted peanuts to left, a major feature of this fast-casual chain. (Image via Wikipedia)

WASHINGTON, February 12, 2015 – As long-time DC-area residents, we’re partial to local businesses because, like the old-fashioned loyal Americans we are, we figure you should take care of your own first. And as far as the now nationwide just-like-mom’s burger chain Five Guys, they’re one of our area’s hometown business heroes.

Back in the early 1990s, the Prudent Man worked for a time in Arlington, Virginia, as the sysadmin for the graphics division of a large print shop. Our building was located only a few miles from the original Five Guys. It’s single location was plunked down in an extraordinarily nondescript strip shopping center somewhat off the normally beaten path, even for Arlington.

Urged on by a fellow worker who was dating one of the “guys” at the time, the Prudent Man figured he’d try out a Five Guys burger and see what all the fuss was about. Using “marketing and Management By Walking Around,” PM jumped in the car and headed off to do some product research at Five Guys’ burger central.

What a surprise. The line to order Five Guys burgers stretched out their front door and into the parking lot. Service was efficient but understandably not up to true fast-food speed. Five Guys burgers are made to order and don’t spend time under the heat lamps drying out as often happens at regular fast food joints.

After getting hold of a classic Five Guys burger with cheese and most of the large number of available toppings, PM was surprised and initially disappointed. These were normal, ordinary burgers like you’d make at home.

But then, the light bulb went on. At home. That’s it. These burgers were extraordinary. Nostalgia. The Bells of St. Mary’s. The Nostalgia-Meter started ringing out of control.

These sandwiches were a better-than-ever version of what we used to get at home when they were lovingly hand-formed, seasoned and cooked to order by mom. They were actually the real deal, not mass manufactured, silver dollar-sized, very processed beef patties surrounded by a massive, tasteless bun, just like Clara Peller (God rest her soul) complained about over 30 years ago in those classic Wendy’s “Where’s the beef?” commercials.

It turns out that once you’d had your first Five Guys burger, you knew it wouldn’t be your last. Freshly formed from premium ground beef, they tasted like real beef, the kind of down-home burger that, yes, a stay-at-home Boomer’s mom might have custom grilled for you and your chowhound-hungry pals back in the day after a long afternoon playing baseball in a nearby vacant lot.

Better yet, Five Guys’ array of price-included toppings were (and are) substantial, ranging from the standard tomato and lettuce—both fresh and well-selected—along with onions, mushrooms, jalapeños, and plenty of other stuff you can select at the register. The lettuce, alas, is good old iceberg, hardly innovative. But burger fans are used to it and appreciate its reliable crispness, especially at Five Guys, where it’s not shredded but layered onto the sandwich the way God Himself intended.

Flavorings? No secret sauce. Just the standard ketchup and mustard choice we used to have as kids. The A&P didn’t sell Ann Page Secret Sauce. Like mom, Five Guys generally keeps things simple.

But, as we love to say, “Wait. There’s more!”

Like Shake Shack, burgers are not the only thing on the menu, although their menu is considerably more basic than their relatively new competitor. Equal to their burgers, Five Guys fries are something special. They are similar to Shake Shack fries, fresh and certainly hand cut.

But unlike Shake Shack fries, Five Guys fries are thinner, un-crisp, and come with skins on. And even for the smallest size, Five Guys fries are served in enormous quantities. On the whole, though we generally prefer the kind of crunch that Shake Shack fries offer, we definitely also prefer potatoes with their skins on, which is how Five Guys offers theirs. And that simple fact tilts the journey to French Fry Heaven in the direction of Five Guys.

Granted, Boomer moms who cut their own fries always used peeled potatoes, as does Shake Shack. But in this case, we think the marginal improvement in nutritional value of skins-on fries makes a difference. Plus, for us at least, they taste better, more potato-ey, however one defines that. This is likely due to the fact that Five Guys, like Mickey D’s, buys a very specific kind of potato from very specifically chosen farms, thus keeping the taste and the quality of this product distinctive, familiar and reliable.

That said, even though Shake Shack fries are a runner-up in our estimation, at least in our estimation, they’re a damn sight better than what you’ll get at official fast food joints, and that includes MacDonald’s.

While we do find the Shake Shack menu technically superior and a winner in many ways, we still have to give the edge to our local guys at Five Guys. Five Guys does one thing and does it well—it makes fresh, tasty burgers and fries. No fuss, few frills. Just good, unfashionably “manly” burgers that taste wonderful, just as they did in those thrilling days of yesteryear.

Add to that the extra-special bonus of unlimited, free, roasted and salted peanuts and cha-ching! You have a winner.

So how do I invest in Shake Shack or Five Guys?

Hold on there! First of all, if you didn’t get in on the recent Shake Shack (SHAK) IPO, why don’t you wait for at least a quarter, maybe two, to see if these guys actually can post net earnings. Or at least a torrid growth stock growth rate. Just because you like or love the product doesn’t necessarily justify investing in the purveyors.

As for Five Guys share, well, there’s a problem. While you can get shares in Shake Shack now, there are NO shares available for Five Guys. That’s because this privately held chain is still mostly-owned by 70-year old about-to-retire founder Jerry Murrell and his five sons—the actual “Five Guys”—the still fast-growing company has no plans to offer shares to investors. Is that 1950s and 1960s, or what?

The Prudent Man is well aware that, at least a few years ago, this then-budding chain was periodically offering private placement “notes” in $10,000 increments to local investors who wanted an income-producing vehicle. They paid a pretty high interest rate in the mid-2000s, along the lines of 10 percent as we recall.

The Prudent Man, alas, took a pass on these. But thus far, they’ve all paid off, were redeemable at par at any time, and offered a nice income. We’re not sure if these notes are still available, but that’s one way Five Guys was able to grow in its early franchising years.

Surprisingly, it turns out they grew the chain by something amounting to an early, up-close-and-personal version of what we’d now probably dub “crowd-funding.” We see time and time again in U.S. business history, from Henry Ford to Steve Jobs and Steve Wozniak to Jerry Murrell that the most innovative ideas still arise from moms and pops and crazy kids screwing around in dad’s garage—not tired, over bureaucratized conglomerates with five-year product planning cycles.

Five Guys and the way they funded themselves certainly proves to be a case in point.

When it came to this early version of what was later called crowd-funding, Five Guys got there first. Just a dad and five sons with a great product, happy customers, and some genuine, forward-looking business horse sense.

In a different way, the more traditionally corporate Shake Shack has the same feel, although its management was technically slicker from the start.

But can both chains continue to compete successfully against a growing menu of fast-casual concepts? Who knows? But as we discover the answer in the months and years ahead, we’ll continue to enjoy the authentic, down home burgers and accompaniments that Shake Shack and Five Guys continue to put out.

The rise of fast casual is causing increasing headaches for Mickey D’s and the other fast food chains. The phenomenon is not much from what happened with mass-produced national beer brands. Over the years and without much notice at first, those tiny, weird Portland Oregon and Washington State brewpubs helped spawn the likes of Sam Adams and the now-massive microbrew movement that seems to have obliterated the once customary crap at the tap.

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Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN).
A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17